Money may not buy you happiness but when you are financially independent you have less worry in life. The worst thing in life is not to take financial issues seriously. These are the things to avoid when money is concerned:
1. Not knowing your Net Worth : Not knowing what you own and what you owe means not knowing what to do to improve your financial situation. The most crucial issue is to settle outstanding debt as soon as possible before it snowballs into much bigger amount and go beyond your means to pay.
2. No monthly budget: The purpose of a monthly budget is to spend within your income and to avoid incurring debt. Plan and follow your budget.
3. Do not settle credit card bills fully and promptly: The worst thing of using credit card is to take the easy way out; that is to pay just the minimum amount. The outstanding amount will attract high interest charges and the accumulation of more interest. It is very likely that it will lead to bankruptcy.
4. Satisfy your wants on credit: Avoid spending on impulse to buy what you want on credit because you know very well that it is not within your budget. Exercise self-discipline and self-control to curb unnecessary expenditures.
5. No emergency fund: Not setting aside an amount for rainy days is inviting troubles if you are out of work for a few months. You have to borrow to meet your usual monthly expenses and recurring payments.
6. No insurance cover for disability: Do pass the risks to the insurers to cover yourself in the event that you are involved in an accident or suffering from critical illnesses. So when you are unable to work you can reimburse your medical bills and make claim to cover your disablement to work.
7. Spend more than what you have earned: Incurring debt is the only way to spend more than what you have earned. It is not a prudent thing to do.
8. Do not pay yourself first: Saving regularly is the stating point to financial freedom. Make it easy for you to save by deducting a fix amount from your pay and deposit the money into a savings account.
9. No priority in money matters: The first priority is to settle outstanding debt. When you are debt- free the next thing is to save and invest and grow your money.
10. No financial planning for children’s further education and your retirement: The best time to start is now if you have not started doing so. Let time and compound interest work for you. Before you know you will have accumulated a substantial amount of money.
Personal financial management requires discipline, restrain and control. The goal is to achieve financial freedom.
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